In Japan Automakers Waging Price War

TOKYO, November 24, 2002; Japan Today reported that Japanese automakers are waging a price war in a bid to boost sales hit by the prolonged recession.

By slashing recommended retail prices of remodeled passenger cars as well as launching new models, they hope to bolster their competitiveness and spur demand.

In the past, automobile dealers sometimes negotiated price cuts with prospective customers for cars in the showroom that would soon be superseded by newer models.

But, the current move to reduce prices of newly remodeled cars is the first of its kind, in Japan at least, an industry watcher said. "I hope that the price-cutting competition will open the way for expanding domestic consumption," he said.

In September, Toyota Motor Corp put on the market a "special edition" of its best-selling Corolla at a price 30,000 yen lower than that of the basic model. This represents "a significant discount," a Toyota official said.

The special edition features, among other things, water-repellant glass with ultraviolet ray protection.

Since the beginning of this year, Toyota has been offering discounts ranging from 2% to 6% on most of its Fun Cargo and Vitz compact cars and its Opa station wagon. "They are a really good buy," the official said.

Not to be outdone, other carmakers are also offering "good buys."

Honda Motor Co launched improved versions of its Odyssey minivan at prices 70,000 yen lower than the basic model in October.

The company has also upgraded the equipment installed in its minicar models and priced the cars 60,000 yen lower than the basic model.

Mitsubishi Motors Corp, Mazda Motor Corp, and Suzuki Motor Corp, have also cut their vehicle prices.

"We don't want to get bogged down in a war of attrition by continuing the price-cutting competition," an official of one of the smaller automakers said. But with the industry leader offering discount prices, "we have no choice but to follow suit," he said.

Foreign automakers have also entered the battle.

In September, the Japanese subsidiaries of France's Peugeot and Citroen marked down their compact car prices by margins of 80,000 to 100,000 yen.

They appear intent on grabbing market share from German makers, long the leaders in the imported car market.

Despite these efforts, however, car sales in Japan remain in the doldrums. According to the Japan Automobile Dealers' Association, new car sales in Japan in the first 10 months of this year fell 3.4% from a year earlier to 3.33 million.

The Japan Mini Vehicles Association reports that domestic sales of new minivehicles during the same period posted only a marginal increase — of 0.5% — to 1.55 million.

Toyota and Honda chalked up record sales and profits for the first half to Sept 30 of the current business year, thanks to brisk sales abroad. Other Japanese makers also reported strong midterm results.

However, with Japanese consumers still keeping a tight hold on their wallets, the price-cutting and other marketing competition is expected to continue for some time to come. (Kyodo News)